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Aereo’s latest victory: what does it mean for the future of broadcast television?

Earlier this month, a Boston federal judge denied Hearst-owned Boston-station WCVB-TV a preliminary injunction motion against Aereo, strengthening Aereo’s Second Circuit victory in WNET v. Aereo, Inc., decided in April. Aereo provides both live and time-shifted streaming of over-the-air television channels to paying subscribers. To provide this service, Aereo relies on its use of tiny antennae, which are individually assigned to one user at a time. When a user decides to record a program, an antenna that is assigned exclusively to that user for that time period intercepts the signal as the program is broadcast over-the-air and transmits it to the user’s designated space on Aereo’s hard drive. Aereo has already installed banks of small antennae throughout the Boston area for this purpose. Aereo’s system does not permit users to download permanent physical copies of programs to their personal hard drives, and instead all copies are retained on Aereo’s remote hard drive.

Hearst sought to enjoin Aereo from infringing WCVB’s exclusive rights under the Copyright Act. The court stated that Hearst could be granted a preliminary injunction if they demonstrated that Aereo infringed upon their public performance right under the Transmit Clause, 17 U.S.C. § 101, of the Copyright Act. The District Court ruled that Aereo’s technology did not constitute a “public performance,” rather Aereo is transmitting private performances. The court relied on the fact that Aereo’s system employs individually assigned antennae to create unique copies of programs and transmits them to the users only at their request.

The Massachusetts District Court ruling reflects a current trend in the interpretation of the public performance right. In 2008, the Second Circuit in Cartoon Network LP v. Cablevision held that “RS-DVR” technology that allows users to record programming on remote servers for later viewing does not infringe the original broadcaster’s public performance right because the technology’s means of transmitting a recorded program to the viewer who recorded it did not constitute a “public performance.” Last April, the Second Circuit relied on this precedent in a similar suit against Aereo and stated that Aereo’s service was not a “public performance” because of the antenna technology, which captured the signals and individually transmitted them back to the subscriber.

What does this mean for the future of broadcast television? While cable companies pay broadcasters billions of dollars in fees to show broadcast TV channels like NBC, CBS, and ABC to their subscribers, Aereo bypasses the fees. This presents a direct threat to a longtime industry business model.

Broadcast TV companies, including Fox, the Walt Disney Company (which owns ABC), CBS, PBS, Univision, and Comcast (which owns CBS and NBC), petitioned the U.S. Supreme Court this month to rule that Aereo’s business model violates the Copyright Act. A possible victory for Aereo would have huge implications in multiple broadcasting spheres. Already, cable television providers DirecTV, Time Warner Cable and Charter Communications are considering capturing free broadcast-TV signals to avoid paying billions of dollars in retransmission fees.

In a post for The Media Institute, Professor Jane Ginsburg, a leading copyright scholar, cautions against the original Second Circuit ruling and argues that the court conflated “performance” with “transmission” in its analysis of the Copyright Act. She provides a scenario to illustrate the negative implications of Aereo:

Consider a variation on Aereo, one that might be a “public” performance under that decision’s “common source copy.” Suppose Mr. Hapless creates a webpage whose access is limited to close family and social acquaintance. Mr. Hapless being only modestly outgoing, his circle of social acquaintance that can access his webpage does not exceed 25 persons, a statutorily insubstantial number, we shall assume. On his webpage, Mr. Hapless posts a digital file of a song that he recorded from a webcast. Hapless’s friends can click on and listen to the song whenever they wish; no two listen at the same time. Under Aereo, Hapless might be publicly performing the recording by transmission because his friends, albeit listening on-demand asynchronously, are receiving the transmission from a common source copy situated on Hapless’s webpage. But it should be clear that Hapless is not publicly performing, not because none of his friends receives the same transmission, but because, within the restrained social circle, the friends are not “members of the public” and Hapless therefore is not transmitting “to the public.”

By contrast, if Hapless’s “friends” numbered in the hundreds or thousands, their acquaintance essentially virtual, his transmission would be “to the public,” not because of the single source copy, but because of the substantial number of persons to whom he makes the communication available, whether they listen “at the same time or at different times.”

Indeed, the potential pitfalls of Aereo’s victories are numerous. Already, the shift from watching live television to streaming programs online is profound. So-called cable-cutters, who use streaming services such as Hulu.com, Netflix, and now Aereo to bypass traditional cable television are growing in number. While the future remains uncertain, one thing remains clear: the broadcast television industry will need to adapt to rapidly changing technologies.

Hearst sought to enjoin Aereo from infringing WCVB’s exclusive rights under the Copyright Act. The court stated that Hearst could be granted a preliminary injunction if they demonstrated that Aero infringed upon their public performance right under the Transmit Clause, 17 U.S.C.